Exam 7: Decision Making and Creativity

In the late 1970s,the Premier of British Columbia announced that the province would host a transportation exhibition in 1986 with a modest budget of only $78 million.On at least two occasions,administrators recommended cancelling the exposition due to cost overruns and labour troubles,but the government decided to continue with the project.But by the end of Expo 86,the budget exceeded $1.5 billion with a deficit of $300 million.Using your knowledge of escalation of commitment,discuss four possible reasons why the government might have been motivated to continue with the project. B. M. Staw, 'Expo 86: An Escalation Prototype', Administrative Science Quarterly, 31, 1986, pp. 379-91). Students may identify any three of the four causes of escalation described in the textbook and highlighted below. Perceptual blinders. Government leaders may have had perceptual blinders; they may have unconsciously denied or neutralized negative information about the decision. (In fact, staff reports produced in the early stages of Expo 86 warned of project escalations, but they were either ignored or downplayed by the British Columbia government. Moreover, government leaders presented overoptimistic revenue expectations and they lightly dismissed criticisms of these estimates.) Self-justification. Cancelling Expo 86 would have suggested that the Premier of British Columbia (who originally proposed the fair) made a bad decision, whereas continuing the fair would be a vote of confidence towards his leadership ability. The Premier also may have continued the project because he had repeatedly emphasized the value of the project and to reverse this position would convey an image of inconsistent leadership. Finally, the Premier's decision was face-saving for the entire province because cancellation would jeopardize British Columbia's image as a place where challenges are accomplished rather than abandoned. Closing costs. Discontinuing Expo 86 would have had both economic and political closing costs. (In fact, it was estimated in 1984 that the purely economic price of cancelling Expo 86 was $80 million.) The government had hitched its reputation to the success of Expo 86, so the political costs of cancelling the project would have been very high. Prospect theory effect. People have more aversion to losses than to gains, and they are more willing to risk taking losses than receiving gains. Thus, the Premier may have poured more money in because it would be more painful to stop the project. In other words, they may have had inflated expectations of their ability to overcome problems that faced the project.

The rational choice model of decision making is impossible to apply in reality because:

Divergent thinking increases the level of:

Knowledge and experience can undermine creativity,because it can lead to routinization of that knowledge.

The decision maker's emotions play an important role in his or her identification of a problem or opportunity.

The concept of bounded rationality holds that:

Decision makers typically look at alternatives sequentially and compare each alternative to an implicit favourite.

Which of the following occurs during the incubation stage of the creative process?

Post-decisional justification causes decision makers to forget what decision they made.

The rational choice model of decision making begins with:

Decision structure,risk of conflict,and decision commitment are:

WesTech Components wants to hire several people for jobs requiring a high degree of creativity.Identify three individual characteristics that WesTech should consider when selecting job applicants who have a high potential for creativity.

Which of these statements about creativity is FALSE?

Employee involvement improves the number and quality of solutions.

The ideas that appear during the insight stage of creativity are quickly forgotten unless documented.

Recent studies of human decision making conclude that which of the following ultimately energizes us to select the preferred choice?

A marketing specialist needed to find a new way of marketing the company's main product to clients.While watching a movie one evening,the marketing specialist saw a scene that gave her inspiration for a new marketing plan.According to the creative process model,the stage in this creative process after inspiration is:

Which of the following decision-making activities tends to make the most use of tacit knowledge?

Describe the four stages of the creative process.

Satisficing occurs when people continue on a failing course of action.